At the recent Legalweek New York conference, Clio, a provider of cloud-based legal technology, unveiled the 2024 edition of its Legal Trends for Mid-Sized Law Firms report.
This comprehensive study casts a spotlight on the financial performance, technology impacts, and, newly this year, the role of artificial intelligence (AI) in legal practices, specifically within mid-sized law firms which are characterized by having 20 or more employees.
The report delineates a landscape where lawyers at mid-sized firms are achieving higher earnings than previously recorded, yet face persistent challenges in billing and collection. A novel metric, termed “lockup,” has been introduced to quantify the delays in cash flow resulting from uncollected revenues, underscoring a critical area of concern for such firms.
It emphasizes the necessity of adopting faster payment methods, noting that smaller firms are currently leading the way in utilizing online payment solutions.
Jack Newton, CEO and Founder of Clio, highlighted the transformative potential of AI in the legal sector. He noted that while AI integration presents a competitive edge, the adoption of technology, particularly in facilitating payments and collections, remains slow among mid-sized firms. Newton urged legal professionals to harness the insights from the report to gain a competitive advantage by optimizing their technology use for the firm’s financial health.
The study also revealed a significant uptick in productivity within mid-sized law firms, with a nearly 60% increase in billable hours compared to 2016. This rise is reflected in increased billings and revenue collections, marking a period of substantial financial and operational success. Despite this, the report points out that mid-sized firms still lag behind their smaller counterparts in the efficiency of payment collection.
Additionally, the attitudes towards AI among lawyers in both mid-sized and smaller firms were examined, showing a cautious yet recognizing stance towards its potential benefits. Despite skepticism about AI’s current capabilities, its use in marketing, legal research, document drafting, and litigation discovery is already notable. The report suggests a disconnect between the application of AI in legal practices and client expectations, stressing the importance for firms to align their technology strategies with client demands.
Clio’s Lawyer-in-Residence, Joshua Lenon, emphasized the importance of technological adoption for mid-sized law firms to remain competitive. He pointed out that technological advancements have leveled the playing field, allowing smaller firms to scale effectively and compete with larger entities.
Clio’s commitment to supporting mid-sized law firms is evident in its continued investment and tailored services for this market segment. With over 1,000 mid-sized law firms utilizing Clio’s services, the company’s influence in this sector is significant.
The 2024 report, leveraging data from tens of thousands of legal professionals, aims to benchmark industry trends and identify areas for improvement, reinforcing Clio’s role in transforming the legal experience through technology.